I focus on the strategic, economic and business implications of defense spending as the Chief Operating Officer of the non-profit Lexington Institute and Chief Executive Officer of Source Associates. Prior to holding my present positions, I was Deputy Director of the Security Studies Program at Georgetown University and taught graduate-level courses in strategy, technology and media affairs at Georgetown. I have also taught at Harvard University's Kennedy School of Government. I hold doctoral and masters degrees in government from Georgetown University and a bachelor of science degree in political science from Northeastern University. Disclosure: The Lexington Institute receives funding from many of the nation’s leading defense contractors, including Boeing, Lockheed Martin, Raytheon and United Technologies.

Threatened Site Sustains Most Of U.S. Combat Vehicle Industry

An M2A2 Bradley Fighting Vehicle kicks up plumes of dust as it leaves Forward Operating Base MacKenzie in Iraq for a mission. (Photo credit: Wikipedia)

In the rolling farmland of south-central Pennsylvania, not far from the historic battlefield at Gettysburg, America’s fading combat-vehicle sector is preparing to make a final stand. A 143-acre industrial complex near the town of York is the last site where most of the Army’s tracked war machines can be built, but the service plans to close it next year, and it may never reopen.

A similar fate awaits the Army’s sole surviving tank plant in Lima, Ohio, but that site only upgrades tanks. The Pennsylvania factory assembles and sustains tracked troop carriers, self-propelled artillery, mine-resistant trucks and even the armored tractors that would tow damaged tanks off future battlefields. Now it is all about to disappear, along with 7,000 skilled jobs at suppliers scattered across dozens of states.

The Army says it can’t afford to keep the plant open while also developing a new generation of tracked combat systems, so it wants to close the Pennsylvania facility for several years and then reopen it. At least, that’s the plan. But you can’t mothball workers, and many of the skilled machinists and welders at the site — 22% of whom are veterans — are fast approaching retirement age. So it’s anyone’s guess how long it might take and how much it might cost to rebuild the workforce once it is disbanded (it takes three years to train a ballistic welder).

If there is no urgent threat driving military planners when the time comes to reconstitute the site, chances are it won’t happen. Military budgets are expected to shrink for the remainder of the decade, so money will be tight. But for the same reason, the next generation of ground combat vehicles is also unlikely to materialize, given its projected cost of at least $10 million per vehicle. So we may be witnessing the final demise of an industrial sector that has largely defined land warfare for the last century.

Ironically, the York complex is operated by BAE Systems, which is headquartered in the United Kingdom — a country that already has decided to abandon its own combat-vehicle industrial base. But the site traces its history to the early 1960s, when a company called Bowen-McLaughlin York (BMY) built a plant there because it was roughly equidistant between the two Army commands involved in buying combat vehicles. BMY thrived during the Cold War, but shortly after the Berlin Wall fell the conglomerate that had acquired the company merged it with similar operations owned by FMC Corporation to create an independent entity called United Defense.

FMC began as the Food Machinery Corporation in California in the 1920s, and like BMY had gotten into the combat vehicle business as a result of World War Two. It started out making amphibious landing vehicles for the Army and Marines — 11,000 before the war ended — which eventually evolved into the Amphibious Assault Vehicle still used by the Marines today. It also developed conventional troop carriers for the Army, including the M113 used in Vietnam and the M2/M3 Bradley developed during the Reagan years as a battlefield companion of the Abrams tank.

In the end, all of the skills for building combat vehicles such as the Bradley and the Marine amphibious tractor ended up concentrated at the complex near York. FMC had been assembling its vehicles in Santa Clara, California, but real-estate prices in what came to be known as Silicon Valley skyrocketed, so when the companies merged it was a no-brainer to consolidate operations at the Pennsylvania site. United Defense, the combined business, was acquired by the Carlyle Group investment banking house in 1997, and then sold to BAE Systems in 2005 — which later merged it with another combat-vehicle business called Armor Holdings.

So it is no exaggeration to say that most of America’s industrial heritage as a source of tracked combat vehicles has compressed down to one location in the cornfields of south-central Pennsylvania. The plant was going gangbusters when BAE Systems acquired it at the height of the Iraq war, but the workforce has now dwindled from over 3,000 personnel to 1,250, and last month BAE announced it would eliminate 175 more workers in the spring as Army demand shrinks.

Activity at the plant has already dipped below the 400,000 annual hours of work needed to sustain an economical rate structure. Further contraction in 2014 will push the activity level below what is needed to maintain key skills. The Army’s solution is to shut the complex entirely until it is needed to upgrade Bradley troop vehicles and build new systems in 2018. But nobody seems to have a handle on what it would cost in time and money to bring the York plant back to life.

One reason why is that there are plenty of other manufacturing jobs to be had nearby. For instance, Harley-Davidson employs about half of its own workforce assembling motorcycles in York. If the workers who don’t retire when BAE’s facility is mothballed migrate to places like Harley, they aren’t likely to ever return to their old jobs. Harley pays well, and the skills required are not quite as demanding as those at the BAE plant — where every ballistic weld has to be X-rayed to assure it can withstand the shock of incoming fire.

Although the Army has good reason to be concerned about the budget environment that lies ahead, it probably should be more concerned about the combat environment it could face once it mothballs its combat-vehicle plants. The main reason it was able to counter the unexpected threat of improvised explosive devices in Iraq was that the Pentagon launched a crash program to build thousands of heavily-protected trucks. Today, production lines that can build such trucks are one by one going cold as military spending dries up. There will be not be much “surge” capacity left in a few years.

But trucks are just the beginning of the problem. The M2/M3 Bradley infantry vehicles will remain a core asset of Army combat brigades for decades to come even if new ground combat vehicles enter production on time. The M109 Paladin system built and sustained at York is the Army’s only self-propelled artillery system (and its most lethal). The upgraded M88 Hercules recovery vehicle is the sole system available for dragging disabled combat vehicles out of harms way. York is the one place in America that can assemble and substantially upgrade such systems.

It is also one of the very few places that could plausibly field a successor to the venerable M113 troop carrier, which the Military Channel recently designated as the most important infantry vehicle in history. What made the lightweight carrier so valuable was that it could be airlifted to trouble spots quickly, but could still provide protection for troops against gunfire once on the ground. Although it seems rudimentary compared with the heavier Bradley, the Army will need thousands of replacements to deal with various contingencies in the future, and York is a source that can credibly supply them.

So shutting York is risky. Unfortunately, it follows the standard pattern that America’s political system exhibits every time it exits a ground war. Military and political leaders convince themselves they can rely on air power and sea power to fight future wars, and thus neglect the industrial base that makes rapid production of armored systems feasible. So when a new conflict comes along that requires occupying foreign real estate for extended periods of time, the military has to scramble to avoid defeat.

It doesn’t have to be that way, and it shouldn’t be in a world where the Pentagon has backup plans to hedge against the possibility its preferred path forward might go awry. For a few hundred million dollars, the Army could keep the York plant working at a reduced level of activity on Bradley upgrades and other investments that the active Army and National Guard say they are going to need. Because there are multiple product lines at the plant, skills can be applied more flexibly than they would be at the single-product tank plant in Ohio.

What survived would be a mere shadow of the combat-vehicle industrial base that America once had. But it would be enough to preserve the skills and supplier base required to ramp up production fast in an emergency. The alternative is just to cross our fingers and hope that at sometime in the future we can recreate what we have lost. In the meantime, potential adversaries will be drawing their own conclusions about the Army’s ability to respond quickly to aggression — and how many casualties Washington will accept because it has once again allowed its military to become unprepared for combat.

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